Eurozone inches towards rescue deal. EU leaders said they made progress at the weekend towards formulating a comprehensive plan to solve the eurozone's debt crisis, although no final decisions will be made until yet another summit on Wednesday. The leaders agreed on a framework for a bank recapitalization of up to €110B ($153B), and on how to leverage up the eurozone's EFSF rescue fund to prevent contagion, although differences remain over the size of losses for Greek bondholders. Banks have agreed to a 40% "voluntary" writedown, Reuters reports, but governments are demanding 60%.
White House to ease home refinancing. In an effort to boost the economy, President Obama is set to today announce an overhaul of the underused HARP program to make it easier for underwater homeowners to refinance their mortgages. The changes will include allowing borrowers to obtain cheaper loans regardless of how far their homes have dropped in value, thereby eliminating previous limits. The plan will also streamline the refinancing process for homeowners who are up to date on their payments, and allow for the waiving of some fees. Officials reckon the changes will enable up to 1M borrowers to refinance, adding to 894,000 since the start of the HARP program in early 2009.
Eurozone heading for recession... As politicians agonizingly attempt to solve the eurozone's debt crisis, preliminary PMI figures for October show the bloc heading for recession. The reading dropped to 47.2 from 49.1 in September, indicating that the rate of contraction increased, with services and manufacturing PMI falling. German manufacturing fell for the first time in two years, while French services activity plummeted. "On past form, the headline index is now consistent with a quarterly contraction in GDP of around 1%," said Capital Economist's Ben May.
...but China and Japan show resilience. China's manufacturing sector returned to expansion in October as HSBC's PMI index rose to a preliminary five-month high of 51.1 from 49.9 in September. "All these data confirm our view that there is no risk of a hard landing in China," HSBC said. Meanwhile, Japan posted a ¥300.4B ($3.9B) trade surplus in September as exports rose 2.4% year-on-year to ¥5.98T, with both indicators topping forecasts and recovering all their losses since the March earthquake. Exports grew despite the yen's strength, the EU debt crisis and slowing overseas growth, although these factors are still a threat.
FBI probes Olympus payment. The FBI is investigating a $687M advisory fee that Japan's Olympus (OCPNY.PK) paid during its $2B takeover of U.K. company Gyrus Group in 2008, The New York Times reports. The payout has been at the center of a growing firestorm after Olympus ousted CEO Michael Woodford on October 14, because, he said, he planned to expose the exorbitant charge. The company's shares have plunged 56% since Woodford was fired.
Peabody, ArcelorMittal succeed in $5B bid for Macarthur. Peabody Energy (BTU) and ArcelorMittal (MT) have obtained a 59.85% majority interest in Australia's Macarthur Coal (MACDF.PK), ensuring success for their A$4.9B ($5B) bid. Peabody and ArcelorMittal were given a major boost last week after China's Citic Resources (CTJHF.PK), which holds 25.2%, backed their offer. The deal gives the acquirers control of the world's largest producer of pulverized coal at a time of increasing demand for the raw materials used in steel production.
Sprint bid to stop AT&T/T-Mobile deal goes to court. Sprint (S) will go before a judge in Washington today requesting that it be able to carry out a lawsuit to block AT&T's (T) proposed $39B acquisition of T-Mobile USA (DTEGY.PK). Sprint's case is unusual, especially as the Justice Department is also suing to block the deal. Sprint can point to a 1995 precedent that it should be allowed to sue, although AT&T can cite one from 1986 showing the opposite.
Netflix poised for Q3 profit rise despite missteps. Even though it has alienated customers and investors over the past few months with steep price rises and an aborted attempt to spin off its DVD rental business into a separate website, Netflix (NFLX) is expected to report increased Q3 earnings after the bell today. EPS is forecast to rise to $0.96 from $0.70 and revenues to $813M from $553M, and with shares plunging 57% in Q3, there could be scope for a strong bounce should results top estimates. In addition, Netflix today said it plans to launch in the U.K. and Ireland early next year.
Groupon set to go on a roadtrip. Groupon is due to start its IPO roadshow today and hopes to price the offering by November 3 so that shares can begin trading the next day. Should it succeed, the listing could help uncork the IPO pipeline, with USA Today reporting figures from Renaissance Capital that show that 211 companies are attempting to raise $52B in IPOs, one of the largest pile ups in decades. On Friday, Groupon said it aims to sell 30M shares at $16-$18 each, which would give it a market cap of around $11B.
Google to introduce music service. Google (GOOG) plans to launch within the next two weeks an online music store that ties in closely with its Google+ social network, The Wall Street Journal reports. However, the offering may be undermined by the lack of participation of all the four major record labels. While Google is close to securing a licensing deal with EMI (C) and is holding talks with Universal Music, Sony (SNE) and Warner aren't so keen. Users could quickly abandon the service if they can't find an artist or a song they want.
Four more banks shut. Regulators closed two banks in Georgia, one in Florida and one in Colorado on Friday, bringing the number of failed banks to 84 this year. The total cost of the latest closures to the FDIC's deposit-insurance fund is estimated at $358.8M.
In Asia, Japan +1.9% to 8844. Hong Kong +4.1% to 18772. China +2.3% to 2370. India flat at 16939.
In Europe, at midday, London flat. Paris -0.3%. Frankfurt -0.6%.
Futures at 7:00: Dow -0.1%. S&P -0.1%. Nasdaq flat. Crude +0.6% to $87.92. Gold +1.1% to $1653.50.
Monday's economic calendar:
8:30 Chicago Fed National Activity Index
Earnings Results: Companies that beat EPS expectations today include VFC (VFC). Those in line include Eaton (ETN). Those that missed forecasts include Lorillard (LO). Full real-time earnings coverage here.